This morning we have two important perspectives on the American economy. Here’s the first, from President Trump:
In 2017 the average CEO of the 350 largest firms in the U.S. received $18.9 million in compensation, a 17.6 percent increase over 2016. The typical worker’s compensation remained flat, rising a mere 0.3 percent. The 2017 CEO-to-worker compensation ratio of 312-to-1 was far greater than the 20-to-1 ratio in 1965 and more than five times greater than the 58-to-1 ratio in 1989 (although it was lower than the peak ratio of 344-to-1, reached in 2000). The gap between the compensation of CEOs and other very-high-wage earners is also substantial, with the CEOs in large firms earning 5.5 times as much as the average earner in the top 0.1 percent.
So to sum up: CEOs are making absolutely stunning amounts of money, while workers’ wages are going nowhere. In the past year, wages rose by 2.7 percent while inflation was 2.9 percent, meaning that the average person has nothing more in his pocket than he did a year ago. In fact, wages for most workers have been essentially stagnant for decades.
That means that the problem of inequality didn’t start with Trump. He has, however, done everything he can to make it worse. He gave a gargantuan tax break to the wealthy and corporations; the latter took that tax break and spent it on stock buybacks, which has the effect of boosting stock prices but doesn’t do anything for workers. As a result of the GOP’s sabotage of the Affordable Care Act, the number of Americans without health insurance rose by more than 3 million in 2017, after years of declines following the implementation of the ACA. The Republican war on unions continues to erode workers’ power to negotiate better wages, benefits and working conditions. Trump’s trade war has so far produced no discernible benefits.
Republicans will no doubt reply, “But look at the fantastic job growth! Unemployment is near historic lows!” And it’s true that unemployment is very low right now. But job growth during Trump’s presidency has been nothing more than a continuation of the recovery that started when Barack Obama was president. In the 19 months that Trump has been in office, there have been 3.7 million jobs created. Which is good. But in the last 19 months of Obama’s presidency, there were 3.9 million jobs created. Which was better.
If you want proof that everything is not hunky-dory, just look at what’s happening in campaigns across the country as we approach the November elections. Republicans are not bothering to run on their tax cut, because voters don’t think it did anything for them. Instead, they’re casting desperately about for an argument they can make, and have settled on “Nancy Pelosi is bad.” Democrats, on the other hand, are talking about things such as health care and infrastructure.
At the same time, Democrats seem to have come to a collective realization that as both a practical and political matter, they need to propose sweeping, fundamental change — not just a tweak to the tax code here and a modest increase in the minimum wage there. They’re offering ideas such as universal health coverage, job guarantees and changing the structure of corporate governance to give workers a voice.
The fact that a party long known for its passivity and cowardice is being so bold tells you something important. Democrats wouldn’t be talking this way if they didn’t think the public was receptive to these kinds of ideas, and the public wouldn’t be receptive to these kinds of ideas if everyone thought there was nothing wrong with the American economy.
In theory, you can have a situation where inequality is only a modest problem. If most people feel as though they have a good standard of living, good schools, secure and affordable health care, and plenty of opportunities, they might not get too angry at the CEO driving by in a Ferrari. But if you feel as though you’re underpaid, you have few benefits or job security, your health-care costs keep rising, you can’t afford college for your kids, and you know that the vast majority of the country’s wealth is being captured by a tiny group of super-wealthy people, you might decide that things need changing.
To Republicans, however, everything is basically fine. They don’t believe inequality is a problem that requires any solution. Seriously: Ask Republicans what they think we ought to do about inequality, and see what they say. They’ll look at you as though you asked what the federal government should do to address tooth decay among naked mole rats.
That’s not a strategic decision; it comes from a place of sincere belief. But you’ll know Republicans are really panicking when they start saying they want to do something about inequality.
